India growth to decline to 5.4 pct: IMF
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NEW DELHI, Feb 6 AFP
February 07 2013, 01:53AM
India's annual economic growth is expected to decline to 5.4 per cent with a string of recent reforms not enough to offset a failure to invest in infrastructure, the IMF says.
The finance ministry has previously forecast expansion of 5.7 to 5.9 per cent in the 2012/13 financial year but the International Monetary Fund said in its annual report on India that a slowdown would be more pronounced than expected.
"In 2011/12, India's growth rate was 6.5 per cent. That figure is expected to drop to 5.4 per cent in 2012/13," said the IMF.
"Despite the poor outlook for the global economy, this is a far larger drop than might be expected."
With elections due early next year, Prime Minister Manmohan Singh's government is hoping a string of pro-market reforms unveiled last year and last week's move to cut interest rates for the first time in nine months will boost the economy.
In its report, the IMF said "the government has already taken significant steps to restore growth" with its reforms, which include a hike in fuel prices and plans to allow foreign supermarket chains such as Walmart to operate in India.
However it added that "more needs to be done".
The organisation said that India was paying the price for failing to ensure investment in infrastructure kept pace with economic growth in the previous decade when growth rates were close to double figures.
India's infrastructure shortfalls were rudely highlighted last year when it experienced mass power cuts.
"Addressing India's long-term energy needs, for example, will require solving complicated problems related to coal (which powers most of India's electricity plants), while easing traffic jams will require facilitating the acquisition of land to widen roads or build new ones."
The slowdown in growth has triggered a fall-off in support for the ruling Congress party, with elections due in India in little more than a year.